Morning Commentary: Two Harbors convertible notes in focus, expand on stock drop

By Abigail W. Adams

Portland, Me., July 13 – With the primary market again dormant early in Tuesday’s session, company news and stock movements were responsible for the majority of trading activity in the convertibles secondary space.

Two Harbors Investment Corp.’s 6.25% convertible notes due 2026 were in focus early in the session as stock tanked on the heels of a secondary offering.

While down outright, the 6.25% notes “held up very well,” on a dollar-neutral basis, a source said.

The notes were down about 2 points outright with stock off as much as 8% early in the session.

They were marked at 104.875 bid, 105.375 offered.

The notes expanded as much as 2 points on a dollar-neutral basis, a source said.

Two Harbors’ stock was changing hands at $6.70, a decrease of 8.66%, shortly before 11 a.m. ET.

Stock dropped after the mortgage REIT announced a secondary offering of 40 million shares.

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